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The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy

“On 2 February 2018,
Brand Finance published its Brand
Finance Global 500 2018, this being its annual report on the world’s most
valuable brands.

Obviously, defining the
concept of ‘most valuable brand’ may be open to subjective interpretations, but
Brand Finance defines ‘brand’ as the “Trademark and associated IP including the
word mark and trademark iconography”. It then calculates the brand value using
the "Royalty
Relief method" which determines the value a company would be willing
to pay to license its brand as if it did not own it.

When I started analyzing
this report, I looked at it through the prism of entertainment industry, particularly
the music industry, and wondered how much music IP may be worth.

The value of music
IP derives mostly from copyright and neighboring rights and the transactional
licensing values agreed, not so much from trade marks and patents (although
heavy bets on Artificial Intelligence, Virtual and Augmented Reality and Blockchain
systems may change a bit this traditional vision).So I have tried to understand where the music
is in this report, if owning and licensing “music IP” is valuable for the
calculations, what is it its importance and, obviously, how do we fit music into
the first 10 most valuable brands, if we do (?) ... and we do!

The artists ...

Looking for the music majors

When you
"talk" majors, you refer mainly to Universal, Sony, and Warner. The
three are often mentioned in opposition to the small, localized and
"independent" ("indie") labels. So, I went through the
report searching for these three. Their value comes mostly from licensing
performance, mechanical and recording rights.

Searching for
Universal I found it ranked 125th (up two places from the previous year)
dangerously close to Sony, now coming on the 126th place. Behind comes Warner,
at a humble 154th, which is not bad position, since it has had the highest growth
among the three mentioned (it was ranked, in 2017, #182).

And although this
report does not distinguish the music and non-music divisions of the three
majors, it is interesting to note that all the super licensing music deals
accomplished in 2017 had a positive impact allowing them to rise at good pace in
the ranks relying on their ‘music IP’.

The ‘non-traditional’ big players (are they not ‘industry’ now?)

It doesn't come as a
surprise to see Amazon ranking 1st and throwing away to second and third places
the likes of Apple and Google. The e-commerce giant’s brand value has increased
by 42% and is worth US$150.8 billion. Coincidence or not, this has happened
during the year in which Amazon betted heavily on it music branch, with huge
growth of the number of subscribers of Amazon Prime Music and Music Unlimited,
reaching the third place in the streaming services’ fierce competition for the
highest number of subscribers. Now just add Amazon Alexa and Echo and you guess
it ... music and entertainment really helped to achieve #1.

Facebook in 2017 also
invested heavily on its global music strategy. Hiring former executives from
the music business (Tamara Hrivnak), opening positions for top tier jobs in the
music licensing relations with labels and collective management organization,
its "own-music" projects late last year (SOUND COLLECTION), and the
now announced licensing agreements for the use of music with HFA/Rumblefish, Kobalt,
Global Music Rights, Universal Music Group, Sony ATV and SESAC, just put music
at a central and core point of Facebook’s strategy. We will have to see what’s
in 2018 for us to see.

The producer

Where we will surely
see a huge growth of the music impact in the value of a business will be in relation to YouTube. For now it maintains quite an ‘average’ position, at #42. But as the
report describes (despite criticism from industry and collective management
organizations, and possibilities of legal reform both in the US (DMCA) and EU), it
has more than doubled its brand value to US$25.9 billion, jumping up 70 places.
Furthermore it has announced that it will launch a rival music service to the
likes of Apple Music and Spotify in 2018, that can probably result in a higher
ranking in the table by the end of next year.

And then you reach
Apple, with Apple Music as the 2nd most subscribed streaming service in the
world, and with the announcement that Shazam was acquired to be integrated into
Apple's music business … It appears that music IP will be more and more a
crucial bet for Apple, with streaming in replacement of the zombie download branch, and a bit of the
renewed HomePod to spice things up.

Finding Nemo Spotify?

The #1 music service
in the world, with the highest (by far) number of subscribers, with music
composers and producers credits now included, with renowned playlists, and
heartbreaking sequel of ‘to be or not to be IPO-able’ is not to be found on the
500 list.

The executive

We know that the
heavy lawsuits now pending (Wixen Publishing and the mechanical rights’ perfect
storm), the claims of using “fake artists” which in the year of “fake news” is
not a good association to be having, could hurt badly the Swedish company. But
although not expressly mentioned we see a flash of it. In Tencent. Yes, Tencent
– a brand that ranked up to #21 and operates the most popular social platforms
in China – the Chinese giant which heavily bets on music as well, gives us a
little Spark of Spotify on this list. In late 2017 Spotify, Tencent Holdings
Limited and its subsidiary Tencent Music Entertainment Group (TME) announced
mutual and joint capital investments. TME and Spotify would acquire minority
stakes in each other, with Spotify holding a minority stake in TME, and both
Tencent and TME holding minority stakes in Spotify. So if not on the list this
year, maybe next, for top 10?

ConclusionSmall doubts may
exist that that music IP, whether in the form of revenues derived from
licensing or as the ability to negotiate IP rights almost for free, has a major
impact on the brand valuation of a company, and that both traditional players,
along with new competitors with tremendous market power, rely on their music
branches to increase the value of their brands. And you will probably see the top
10 of the next decade betting relentlessly on music as an increasingly core
business.”

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